Katy Co. has three product lines, X, Y, and Z. The following financial information is available for this year:

	Product X	Product Y	Product C
Sales revenue	65,000	55,000	45,000
Total variable costs	34,000	33,000	32,000
Contribution Margin
Fixed costs
Avoidable	12,000	10,000	9,000
Unavoidable	8,000	7,000	6,000
Operating Income

Required:

a) Katy Co's total operating income is:

b) Assuming the company drops Product Line Z because it generates a loss without replacing it, operating income for the firm will: c) Product Line Z is discontinued and the manufacturing space formerly devoted to this line is used to expand the sales of Product Line X by 30%. Assuming that both the variable costs and avoidable fixed costs were increased by 30%, operating income for the company will:

d) Assuming that Product Line Z is discontinued and the manufacturing space formerly devoted to this line is rented for $5,000 per year, operating income for the company will: